1. Conceptual considerations on (un)employment insurance Celine Peyron Bista And John Woodall ILO 19 October 2011, Hanoi

2. Agenda Differences between UI and EI? Legal considerations EI/UI packages Extension of coverage Comparative efficiency Conclusion

3. Objectives To debate on differences among UI/EI models To propose some measures to reinforce linkages to employment under the existing scheme

4. 4 UI, EI, is there any difference? National schemes may have the title: ▫“Employment Benefit Scheme” (e.g. Korea, Japan, Sri Lanka proposal) or ▫“Unemployment Benefit Scheme” In most cases, the title may not affect the scheme substantively, BUT It can be useful for the title to convey the national policy approach to the subject

5. (Un)employment Benefit: Basic principles ▫To provide income support ▫In the form of periodical payments (mainly) ▫Organized on the basis of social insurance ▫Re-employment promotion UI more emphasis on income security, EI more emphasis on employment promotion

6. 6 The ILO’s Perspective The Provision of Unemployment Benefits on the basis of ▫Periodical payments, and ▫Social Insurance is optimal in most cases, for reasons including: ▫It is well-suited to ensuring the rights of participants; ▫Periodical payments best meet the livelihood needs of individuals and families; ▫The social insurance mechanism allows for “pooling” of risks and costs on an equitable basis, and ▫Allows for protection of workers even when an employer becomes insolvent or individual savings mechanisms fail (as in recent economic crisis).

7. Legal considerations No unique arrangement (UI/EI provisions under SI Law or under Employment Act) Guidelines and benchmark provided by: Part IV of Social Security (Minimum Standards) Convention, 1952 (No.102) Employment Promotion and Protection against Unemployment Convention, 1988 (No. 168)

8. UI/EI package Income replacement Re-employment programs (counseling, job fair) VT and skills development opportunities Public Work Programs targeting at the unemployed Employment stabilization (subsidies for in-Ent. VT, temporary suspension of SS contributions & taxes, etc.) Employment restructuration (subsidies for skills development, technology upgrades, job creation, etc.) targeting at the employees in difficulty

9. Entry point to extend coverage to informal economy (SPF) Inclusion of temporary/seasonal, part-time, outsourced and domestic workers under UI benefits Minimum guarantee income schemes Access to skills development & employment promotion programs to informal economy workers (business management trainings, tax incentives to start-up own business, access to micro- credit, PWPs, job vacancies covering all sector/all skills levels, etc.)

10. Some international practices Benefits Special allowance to employees if job found within 1 st month (Korea) strong emphasis on employment stabilization programs (loans to enterprises, Korea) Tax reduction to create own-business, strong emphasis on VT (China) Financing ½ employers’ contribution to employment promotion (Korea, Japan) Government’s contribution to employment promotion (Thailand)

11. Some international experiences Institutional structure Korea: since Ap. 2011, premiums collection by National Health Insurance Fund (before, COMWEL) Japan: premiums collection and payment by Municipal Labour Offices. Thailand: collection and payment by SSO, DoL, DoSD, responsible for each program

12. Comparative efficiency Income security Job searchImpact on employment Restructur ing & mobility Extension of coverage More U Good protectionDisincentives (moral hazard) Moderately reduces unemployment Mitigates risk of increased inf. eco. Moderately promotes Limited More E Moderate protection IncentivesEmployment stabilization & promotion PromotesPossible (ES & VT opened to inf. eco.)

13. Comparative efficiency EmploymentIncome protection

14. Puzzled institutional structure DoEDoSDSSO Employers Trade Unions UI/EI under MoL Policy coherence & coordination SS policy

15. Ministry of Labour & SS Policy development Employment services design, implementation Training & skills programs Social security Min. of social ass. Policy development Social services & transfers design and implementation Technical expertise Job centersCCTs & other social services (child care …) Min. of health Policy development Health infrastructure Distribution of health cards for free access Health insurance … Subsidized Health Insurance System (HEFs) Min. in charge of infrastructure & rural development Policy development Implementation of PWPs Public works programs Families Working age population Children Elderly Disabled … Social workers & Advisors -Information on programs -Vulnerability & skills assessment -Registration under the different programs & facilitating use of the services… -Delivery of membership cards… Channeling social protection & employment services Social security schemes At policy level: At implementation level, social protection and employment programs: … A one-stop-shop !!

16. Concluding remarks Not one model/formula fits all – social dialogue! Need a strong articulation income security and employment promotion – Protection of the unemployed! Need for coordination among existing institutions/programs rather than creating new structure – One-stop-shop!